Refinancing your home loan should come after you've decided on what you hope to accomplish. For instance, if you want to save on interest rates, you should know how much money you'll save over the life of the loan. Before you refinance, make a list of reasons as to why you're doing it and keep track of how much financial security each one will give you.
If you are considering refinancing, we've compiled a list of everything you need to know about it.
What Is Refinancing?
Refinancing is the process of obtaining a new home loan when the current one is due to expire. You can either keep the same loan product or switch to a different kind.
There is a type of refinancing called "consolidation," where you apply for a loan for the amount of the outstanding balance of all your other loans (credit cards, car payments, etc.). You can also get a new loan to pay off your current loans, such as when you have a variable-rate mortgage and a fixed-rate
Why Should You Start Refinancing?
One of the biggest reasons for refinancing is to gain a lower interest rate. When you refinance your mortgage, you will have the option to get a loan with a lower interest rate, which can save you a lot of time and money.
Another reason for refinancing is to eliminate mortgage insurance. This is a must for people who are looking to refinance a home in an area where the value has increased from when they first got the loan.
Finally, you may refinance to take advantage of a flexible payment schedule. This is a good idea if you've had problems making your monthly payments or are looking to buy a new car or make necessary home renovations.
Benefits of Refinancing
The main reason for refinancing is to save on interest rates. This can benefit you in two ways. The first is if you chose to switch to a longer loan term. If you extend your loan, you will pay less overall because you will pay less in interest.
The second is if you already have a 30-year loan and are looking to switch to a 15-year loan. This will save you a lot of money in interest over the life of the loan.
How Does Refinancing Work?
When you apply to refinance your loan, you will need to provide the lender with your financial information, such as your credit score and income. This can be done either through your mortgage company or through a third-party service.
You'll also need to provide documentation of your current loans, such as your mortgage statement, council rates notice and property insurance policy and tax information.
You can find out if you are eligible for refinancing by speaking to your mortgage company. They will be able to tell you if you are able to refinance and if so, by how much you can save.
Conclusion
Refinancing a mortgage can be a difficult decision, but it can save you in the long run. Most importantly, you need to know what you're going to do with the money you save before you refinance.
Get opportunities to refinance with the help of some of the best lenders in Sydney. At Wealthy You, we want to offer you alternative solutions no matter what financial situation you are in. Get in touch with us today to learn how.
